AVN 68.51 Increased By ▲ 0.76 (1.12%)
BAFL 31.01 Increased By ▲ 0.03 (0.1%)
BOP 4.90 Increased By ▲ 0.09 (1.87%)
CNERGY 3.85 Increased By ▲ 0.09 (2.39%)
DFML 14.15 Increased By ▲ 0.17 (1.22%)
DGKC 42.75 Increased By ▲ 1.75 (4.27%)
EPCL 47.50 Increased By ▲ 0.45 (0.96%)
FCCL 12.15 Increased By ▲ 0.50 (4.29%)
FFL 5.20 Increased By ▲ 0.04 (0.78%)
FLYNG 6.27 Increased By ▲ 0.33 (5.56%)
GGL 11.20 Decreased By ▼ -0.09 (-0.8%)
HUBC 67.52 Decreased By ▼ -0.43 (-0.63%)
HUMNL 5.79 Increased By ▲ 0.09 (1.58%)
KAPCO 28.08 Increased By ▲ 0.04 (0.14%)
KEL 2.33 Increased By ▲ 0.06 (2.64%)
LOTCHEM 26.68 Increased By ▲ 0.48 (1.83%)
MLCF 22.83 Increased By ▲ 1.17 (5.4%)
NETSOL 87.50 Increased By ▲ 1.05 (1.21%)
OGDC 101.20 Increased By ▲ 0.71 (0.71%)
PAEL 11.50 Increased By ▲ 0.35 (3.14%)
PIBTL 4.25 Increased By ▲ 0.01 (0.24%)
PPL 81.30 Increased By ▲ 0.70 (0.87%)
PRL 13.54 Increased By ▲ 0.31 (2.34%)
SILK 0.91 No Change ▼ 0.00 (0%)
SNGP 44.65 Increased By ▲ 0.75 (1.71%)
TELE 6.21 Increased By ▲ 0.14 (2.31%)
TPLP 16.24 Increased By ▲ 0.39 (2.46%)
TRG 123.09 Increased By ▲ 1.51 (1.24%)
UNITY 14.35 Increased By ▲ 0.35 (2.5%)
WTL 1.34 Increased By ▲ 0.02 (1.52%)
BR100 4,234 Increased By 53 (1.27%)
BR30 15,437 Increased By 167.4 (1.1%)
KSE100 42,208 Increased By 484.9 (1.16%)
KSE30 15,920 Increased By 173.9 (1.1%)
Follow us

SYDNEY: The Australian and New Zealand dollars were deep under water on Tuesday as concerns about the impact of coronavirus lockdowns on Chinese demand sank commodity prices and risk trades in general.

The Aussie was lying at $0.7185, having hit a two-month low of $0.7135 overnight when a break of its 200-day moving average at $0.7294 triggered stop-loss selling.

It has now shed 2.6% in just two sessions and risks a further retracement to support around $0.7086/95. The kiwi dollar was huddled at $0.6623, after touching a three-month trough of $0.6584 overnight. It is down 4.5% for the month so far and risks breaking its January low of $0.6531.

Both were undermined by sharp falls in commodity prices with iron ore - Australia’s biggest export earner - particularly hard hit as China accounts for 70%-75% of the world’s imports of the steel-making ingredient.

Australia, NZ dollars left lagging in the race to higher rates

“Iron ore demand face immediate headwinds from potential lockdown extensions in Tangshan,” noted CBA analyst Vivek Dhar. “The city is a major steel-making hub, accounting for around 14% of China’s crude steel output.”

A sharp decline in the Chinese yuan added to the pressure as investors often use the Antipodean currencies as liquid proxies for the Asian currency.

The Aussie will also be tested by local data when consumer prices for the first quarter are released on Wednesday, with markets braced for a red-hot report.

The Reserve Bank of Australia’s (RBA) preferred measure of core inflation - the trimmed mean - is seen jumping 1.2% in the quarter taking annual inflation to 3.4%.

That would be the highest reading since mid-2009 and take inflation above the RBA’s 2%-3% target band, ending years of undershooting and making it hard to justify keeping interest rates at emergency lows of 0.1%.

“At the RBA’s May 3 meeting we expect the Board will adopt a clear tightening bias in anticipation of a move in June,” said Westpac chief economist Bill Evans, who now expects the central bank to hike to 0.5% in June, rather than to 0.25%.

Futures for some time have been more than fully priced for a move to 0.25% in June and are now odds-on for a whole hike to 0.5%.

The market also sees rates reaching at least 2.25% by year end, which would be one of the most aggressive tightening cycles on record if it comes about.

Evans sees rates at 1.5% by Christmas and peaking at 2% in the middle of next year.

Comments

Comments are closed.

Australia, NZ dollars sent reeling as China worries shake commodities

Intra-day update: rupee maintains momentum against US dollar

IMF talks: ‘Some understanding’ reached: MoS Pasha

Intra-day update: Bullish run at PSX, KSE-100 up over 500 points

Qatar agrees to buy OGDCL, PPL shares

PM forms body to activate STZA

Primary deficit: Rs500bn waiver sought from IMF

First six months: Fiscal deficit swells to 2pc of GDP

Petrol shortage hits major cities of Punjab

New landfill sites: Govt decides to alter ICT master plan

Joint sitting of parliament: Rabbani deplores non-inclusion of terror issue in agenda